Sage Accounts - To account for VAT using the VAT Mini One Stop Shop (MOSS)

The new VAT rules came into effect on 1 January 2015.

Under the new rules, when you sell digital services to consumers in other EU countries, the VAT is charged in the country where the customer is based. For example, if your business sells a new app for a smartphone or tablet to a private individual based in Italy, you must charge the Italian VAT rate, currently 22%, instead of the UK rate of 20%.

Your business must either register for VAT and submit VAT Returns in each EU country you sell to, or alternatively, register for the VAT Mini One Stop Shop (MOSS) scheme provided by HMRC and Revenue.

Digital services include, but aren't restricted to:

Broadcasting

The supply of television and radio programs.

Telecommunications

Includes fixed and mobile telephony, fax and connection to the Internet.

E-services

These are services that are heavily reliant on the Internet for their execution. For example, video on demand, apps downloads, music downloads, e-books and antivirus software.

The above list isn't exhaustive. It's important that you understand whether the supplies that you make will fall within these new rules. For further guidance, please contact HMRC or Revenue. UK businesses can also refer to the HMRC quick guide at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/390300/VAT_MOSS_Flow_chart.pdf

Out of the scope of MOSS

The following aren't covered by the new rules relating to MOSS:

• Sales to other businesses (B2B) in the EU.
• Sales to customers located outside of the EU.

VAT Mini One Stop Shop (MOSS) is a scheme provided by HMRC and Revenue to help businesses who sell digital services to non-business customers in other EU countries. You can register for this scheme and submit one VAT MOSS Return each quarter, instead of registering for VAT and submitting VAT Returns in each EU country you sell to. You can find details of the VAT MOSS scheme and how to register on the gov.uk website at https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop and on the Revenue website at http://www.revenue.ie/en/tax/vat/moss/index.html

To use the VAT MOSS online service to account for VAT on digital services, you must:

• Register for the VAT MOSS scheme with HMRC or Revenue.
• Submit an online quarterly VAT MOSS Return to HMRC or Revenue detailing the VAT due in each country.
• Pay your VAT MOSS bill when you submit your return or before the due date of the return.

You can't submit a VAT MOSS Return directly from Sage Accounts. However you can:

1. Process transactions using the VAT rate for the EU country where your customers are based. To do this, you need to set up new tax codes for each country.
2. Identify the values to manually add to your VAT MOSS Return. To do this, you can download and run the Tax Analysis - Sales of EU digital services report.

For further details, please refer to the Steps tab.

To identify the transactions you need to include on your VAT MOSS Return, you must set up a new tax code for each EU country where you sell digital services.

1. Settings > Configuration > Tax Codes.
2. Select the first unused tax code, for example, T10 > Edit.
3. Complete the Edit Tax Code window as follows:

   Rate	Enter the VAT rate for the EU country. NOTE: If you use different rates in a country, for example, standard rate and reduced rate, you must set up a different tax code for each rate.
   Include in VAT return	Ensure this check box is clear. NOTE: Because you don't select this check box, when you check your data the warning 'Transaction uses tax code which is not included in the VAT return' is generate for transactions you post with this tax code. This is expected, please ignore these warnings.
   Reverse Charge	Ensure this check box is clear.
   Enable EC Code	Ensure this check box is clear.
   Description	Enter a description for the tax code, for example, German standard VAT rate.

4. OK.
5. Repeat steps 2 to 4 for each EU country VAT rate you need to use.
6. Apply > Close.

You've now set up your new tax codes. You should use these when you enter EU sales which fall under the VAT MOSS scheme. This ensures these sales are excluded from your normal VAT Return and means they're picked up on the Tax Analysis - Sales of EU digital services report.

To help you complete your quarterly VAT MOSS Return, you must download and install the Tax Analysis - Sales of EU digital services report. for more information, please refer to the following sections.

1. Access the My Sage website: https://my.sage.co.uk/downloads/default.aspx
2. Choose Sage 50 Accounts or Sage Instant Accounts as required > Updates.
3. Locate the the relevant download as follows:

   TIP: If you can't see the download for your version of Sage Accounts, click Other versions on the right-hand side. Alternatively, if you're viewing this article online, you can click the relevant download link in the table below.

   Version of Sage Accounts	Download to use
   Sage 50 Accounts v21 and above Sage 50 Accounts 2014 (v20) or Sage Instant Accounts 2014 (v20)	Sage Accounts 2014 and above - VAT MOSS Report
   Sage 50 Accounts 2013 (v19) or Sage Instant Accounts 2013 (v19)	Sage Accounts 2013 - VAT MOSS Report
   Sage 50 Accounts 2012 (v18) or Sage Instant Accounts 2012 (v18) Sage 50 Accounts 2011 (v17) or Sage Instant Accounts 2011 (v17) Sage 50 Accounts 2010 (v16) or Sage Instant Accounts v16	Sage Accounts 2010 - 2012 - VAT MOSS Report

   TIP: You can check your software version in Sage Accounts in Help > About.

4. Download > when prompted to run or save the file, make a note of the filename, for example, Sale of EU digital services V20.001 > to save the file to your computer, click Save.
5. If a Save As window appears, browse to and select the required destination, for example, your Windows desktop > Save.

You've now successfully downloaded the Tax Analysis - Sales of EU digital services report backup. For details of how to restore this, please refer to the following section.

1. File > Backup > take a backup of your data. For more information, please refer to article .
2. File > Restore > Browse > browse to and select the file you downloaded in the previous section > Open.
3. Backup details > check that the Company Name shows Sales of EU digital services > OK > Yes.

   NOTE: Although the confirmation message advises that data will be overwritten, the backup contains only report and image files and therefore doesn't affect your data.

4. OK > if prompted, enter your logon details > OK.

You've now installed the Tax Analysis - Sales of EU digital services report. You can run this report to see the information you need to complete your quarterly VAT MOSS Return. For more information, please refer to the following section.

1. VAT > Reports > Tax analysis.
   
   Sage Accounts 2014 (v20) and below - Company > Tasks pane > Manage VAT > Reports > Tax Analysis reports.
   
   
2. Select Tax Analysis - Sales of EU digital services > Preview.
3. Enter the date range for the relevant VAT MOSS quarter > OK.

   NOTE: If you don't want to include deleted transactions, ensure you select the Exclude Deleted Tran check box.

This report details the EU sales transactions to help you complete your VAT MOSS Return. Once you've submitted your VAT MOSS Return and you're ready to pay your VAT bill, please refer to the following section.

When you're ready to make your VAT MOSS payment to HMRC or Revenue, you must transfer the balance from the sales tax control account to your VAT liability nominal code. You can then post a bank payment to clear the VAT liability balance.

To transfer the VAT amount to your VAT liability nominal code

1. Nominal codes > Journal entry.

   Sage Accounts 2013 (v19) and 2014 (v20) - Company > Tasks pane > Journal Entry.

   Sage Accounts 2012 (v18) and below - Company > Tasks pane > New Journal.

2. Enter a reference and date for the journal, then enter the following information:

   N/C	Name	Details	T/C	Debit	Credit
   2200	Sales Tax Control Account	VAT MOSS liability	T9	VAT liability amount
   2202	VAT Liability	VAT MOSS liability	T9		VAT liability amount

3. Save > Close.

To post your VAT liability bank payment

1. Bank accounts > Payments > Bank payment.

   Sage 50 Accounts 2014 (v21) and below - Bank > Payment.

2. Complete the Bank Payments window as required, for example:
   
   

   Bank	Date	Ref	N/C	Details	Net	T/C	VAT
   1200	Date of payment	VAT	2202	HMRC or Revenue VAT payment	VAT liability amount	T9	0.00

3. Save > Close.

You've now posted your VAT MOSS payment for the quarter and reduced the sales tax control account balance by the amount you paid.